The city of Los Altos released a staff memo Friday detailing developer interest in the now-razed First and Main site.

The city of Los Altos Friday released an internal memo by a former city employee regarding developer interest in the city-owned property at First and Main streets.

In a statement, the city noted that it released the memo to eliminate “an unnecessary distraction for the newly elected Los Altos City Councilmembers,” sworn in Tuesday. A PDF copy of the memo and the city’s statement are available on the city’s website, www.losaltosca.gov/pr.html.

The city previously declined to release the memo following a public records request by downtown property owner Kim Cranston in July 2011. Cranston, in turn, filed a lawsuit against the city in May requesting its release.

The city declined on the grounds of deliberative process, according to the statement, “due to concerns that doing so would reflect poorly on a former employee, and would also have a chilling effect on robust City staff debate on internal, pre-decisional, strategic, legal and administrative issues, which increases the quality of City executive decisions.”

The Feb. 14, 2010, draft memo in question “was written by a junior staff member who is no longer employed by the City,” the city statement continued. “The draft memo, which is now posted on the City’s website … discusses the sale of the City-owned property located at the corner of First and Main Streets, and presents the junior staff member’s opinion that the City should entertain additional proposals. However, the junior staff member did not participate in Council closed sessions in which these issues were discussed with senior City staff members and the City Attorney, and the draft memo contains many factual omissions and inaccuracies.”

Reached by the Town Crier, Cranston said he was pleased with the decision to release the memo.

“I thought it was inevitable that the city had to release, it because they couldn’t meet the legal burden,” he said. “They had to show that the city’s interest in withholding it outweighed the public’s right to see the document.”

The memo

Then-Economic Development Manager Anne Stedler wrote the memo to Assistant City Manager James Walgren and then-City manager Doug Schmitz after the developer, the Jeffrey A. Morris Group, had already expressed interest in developing the property following an unsuccessful 2008 Request for Proposal (RFP) process, the city statement noted.

In the memo, Stedler suggested the need for an RFP after another unnamed developer showed interest in the property, as well as a potential process to conduct the RFP. She also noted that the unnamed developer – referred to in the memo as “ND” – expressed interest in purchasing and developing the property with the caveat that the project would involve “relocating Safeway to a better site.”

The Safeway property sits adjacent to the First and Main site. Safeway is currently slated to begin construction on a new building on that site in January. The memo identifies “ND” as a developer who at the time was in negotiations for the Cottage Green site on First Street, among other details.

The city’s statement noted that it only finalized an option agreement with Morris after a weeklong postponement “to allow the new, unnamed developer an opportunity to come forward.”

The unnamed developer, according to the city’s statement, failed to do so within that time period and during subsequent city council meetings that addressed the Morris proposal in February and September of 2010.

The council entered into a $3.1 million option agreement with Morris Sept. 14, 2010, and approved his proposal for the site earlier this year.

“At the September 14, 2010, regular Council meeting during which approval of the Morris option agreement was discussed, the ‘interested’ developer was apparently present but did not step forward to express any interest,” the city’s statement read. “Some of the public speakers on this item expressed support for initiating another RFP process, while others expressed appreciation that a proposal which could actually be completed had been submitted and urged the Council to move forward with the project.”

The city’s statement also addressed allegations that the sale of the property to Morris was illegal, noting that it engaged the services of an outside law firm to seek an unbiased opinion about the legality of the sale if a third RFP were not initiated.

“The total cost to obtain that opinion was $25,698,” the statement read. “Once the opinion was received, it was made public and … it found that the sale was legal and followed best practices.”

A PDF copy of the legal opinion is also available on the city’s website.

Still, Cranston said the memo “clearly evidences that other developers were interested in the property, and if given the opportunity, would have submitted proposals.”

He also called on the city council to commission an independent investigation into whether city staff may have prevented other developers from submitting proposals.

The city’s statement disputed previous published reports that it spent $30,000 in legal fees to prevent the memo’s release, noting that it actually spent $15,000.